Contract farming, share farming and joint venture Flashcards
What are the main particulars for a contract farming agreement
The Farmer, the Contractorm the property, the purpose, the enterprise, the contract period, the contracting year, the accounting date, the contract account, the contractors basic fee, the farmer’s basic returnm the divisible amount, the additional fee
What usually is the split for a divisible surplus
80-90% contractor and 10-20% to the farmer
What do the contractor and the farmer have separately
They run separate businesses, with their own bank accounts, VAT and inome tax return
How is the farmers basic return calcualted
Basic return is subtracted from the net return leaving the divisible surpls
How does a shared farming agreement work
The landowner procies the buildings, insurnace and any major maintenance to the land and buildings and part of the working capital for the farm adn some managemetn time. The farm operator provides labour management time and machinery and part of the working capital
How does livestock work in a shared farming agreement
They aan be owned by either party. THere are usually no hire charge
is there any rent or basic fee in a shared farming agreement
No
What do the parties have separately
Both parties run their own profit and loss accunt and submit their own VAT retures. Each party is deeemed a farmer. Each party is exposed full commercial benefits and risks of farming enyprise
How are costs split in a farming divisions (shared farming agreements)
All cost and farm income are split between landowner and operator with the division stated in the shared farming agreement
What are terms in a shared farming agreement
The parties (landowner and share farmer), property, purpose, duration, acounting year, each party running thier own accounts, record keeping, meetings, reporting rolse, responsibiliies, record keeping, details of landowner, fied equip,ent provided by landowner. Details of machinery and equpment provided by shate farmer, government support provided by landowner, government suport provided by share farmer, storage and markeying of produce, split of input and running costs, split of produce and output, insurance, record keeping, dispute mechanism, termination provisions, costs and expenses in preparing agreement s
What are the disadvanage of the contract farming agreement
directly involved in the risk of the business wth ability to control/influence , reward by performance of business and not by rent
What are the benefirs of contract farming agreement
Treated as earned income with ability to offset costs, APR for farmhouse or after new onwership, flexibity to eact to markets, partnering relationshipgoverned by contract rather than statute
What is a joint farming agreement
It is where two or more parties form a joint venutre to undertake farming of some or all of the land. The joint venure is usually between farmers which allows more efficient use of machinery livestock, labour skills andd managemtn acroos the land. They split and can divide he responsibilties between them
Are joint ventures subject to VAT
Yes
What tax benefits do you get for joint ventures
APR and potentially BPR depending on the structure
